Accounts Receivable Confirmation Usage And Effectiveness: Perceptions Of Practicing CPAs

Abstract

This paper reports the results of a questionnaire survey of practicing auditors regarding their assessment of the competence and effectiveness of the accounts receivable confirmation auditing procedure. The respondents indicated they regularly use positive and negative confirmations in practice, and they rated the evidence provided by negative confirmations as significantly lower than for positives. Also, the respondents perceived the detection rate for positive and negative confirmations to be a 20 to 40 percentage points higher than rates reported form empirical research. Thus, auditors may be over-estimating the effectiveness of this auditing procedure and facing higher levels of audit risk than they anticipate.